Problem 8

Problems 011 January 1, 2018, Emme Company sold equipment with a carrying amount of P4,800,000 in exchange for a P6,000,000 noninterest bearing note due January 1, 2021. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type on January 1, 2018 was 10%. The present value of 1 at 10% for three periods in 0.75. 1. What amount should be reported as interest income for 2018? 2. What amount should be reported as gain or loss on sale of equipment